Debt crisis: as it happened December 4, 2012

After four hours of negotiations in Brussels today, EU finance ministers
failed to reach an agreement on euro area bank supervision by the European
Central Bank. They will reconvene on December 12 to continue talks.

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17.11 That's it for our live coverage for today. Tomorrow we'll be focussing on the Autumn statement. Until then, keep an eye on our financial crisis page for all the latest news.

17.08 Europe's main stock markets closed largely unchanged, after initial climbs on news of the Greek buy-back were unravelled by uncertainty over the fate of the US economy as budget talks in Congress fail to reach a resolution.

The FTSE 100 crawled up 0.08pc, the CAC rose 0.39pc, the DAX slid down 0.13pc and the IBEX in Madrid climbed 0.17pc.

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16.45 Rumour has it Moody's is mulling over a downgrade of Germany Luxembourg and Belgium, but the ratings agency has yet to confirm. It put a negative outlook on the three countries in July. Global Head of Dealing at London & Capital Asset Management Steve Collins has been tweeting about it:

&lt;noframe&gt;Twitter: Steve Collins - Trade the News now repeating the Moody's rumour that they will downgrade the last 3 EZ AAA rated countries No comment at all from Moody;s&lt;/noframe&gt;

16.02 Slovenian police have arrested 141 people for "disturbing law and public order" in the eurozone nation's most violent anti-government protests in two decades. The arrests were mostly in the country's second city Moribor, mentioned earlier (14.08).

15.47 The suspect package found in an Italian ministry was found to be harmless, calming fears it contained anthrax.

15.23 A suspect package containing a powder was found in Italy's labour and social affairs ministry today. The seven employees who came into contact with the package were taken to hospital for decontamination, while officers from the bio-hazards division of the fire brigade attended the scene.

15.15 The euro has climbed to a near seven-week high against the dollar, boosted by yesterday's news that Greece will get better-than-expected terms for its debt buyback. Meanwhile the US dollar hit a six-week low against a number of currencies amid uncertainty over Congress reaching a budget deal.

15.08 London mayor Boris Johnson, speaking this morning at a Reuters news event, called for an in-out referendum on EU membership:

It is high time that we had a referendum, and it would be a very simple question. Do you want to stay in the EU single market - yes or no?

And if people don't think the new relationship is an improvement, then they will exercise their sovereign right to leave the EU.

14.58 Bank of Canada's interest rate remains unchanged at 1pc, in a decision led by its governor Mark Carney, set to head up the Bank of England when Mervyn King steps down next year.

The Canadian central bank said it expected that "some modest withdrawal of monetary policy stimulus" will be required, consistent with hitting the 2pc inflation target.

14.44 Marc Sprenger, director of the European Centre for Disease Prevention and Control speaks out on poor conditions in cash-strapped Greek hospitals.

I have seen places where the financial situation did not allow even for basic requirements like gloves, gowns and alcohol wipes.

14.14 French finance minister Pierre Moscovici said he would be willing to compromise on his demand for all euro-area banks to come under the 'single supervisory mechanism', in a call for EU ministers to reach agreement by the end of the year. He said:

We’re ready to accept differentiation in which the banks supervised directly by ECB are large.

Of course national supervisors will be operationally responsible for many, even most banks but the ECB needs the final say.

13.47 The key issues to be resolved for a proposed 'single supervisory mechanism' in the eurozone to go ahead, according to Cyprus finance minister Vassos Shiarly, were "fine-tuning" to guarantee separation of powers within the ECB between banking supervision and monetary policy, deciding out how the system will be phased in, and how the 10 non-euro countries' voting rights will be affected.

13.02 As we mentioned earlier (07.56), this is a picture of the damaged offices of Greek far-right party Golden Dawn near Athens where a bomb exploded early this morning:

12.43 Cypriot finance minister Vassos Shiarly, who chaired the meeting on ECB supervision of eurozone banks, is optimistic that agreement can be reached, despite the clashing views of French and German finance heads. He said:

Despite the disagreements, there is enough goodwill to get this done.

12.36 After today's deliberations fail to reach agreement on the ECB's role in supervising European banks, EU finance ministers agreed to reconvene on December 12.

12.15 Germany finance minister Wolfgang Schaeuble says German lawmakers are likely to reject proposals giving the European Central Bank power to supervise all banks in the 17-nation euro area, while France's Pierre Moscovici called for ministers to avoid a two tier system where only some banks are supervised.

Mr Schaeuble said:

Nobody believes that any European institution would be capable of supervising 6,000 banks in Europe - maybe not in this decade, to be very frank.

Mr Moscovici said:

We have no remit for a dual system of supervision which would call into question the existence of a single system for some banks. The ECB must supervise all banks with a European passport.

11.53 German chancellor Angela Merkel has warned attendees at a congress of her party, the Christian Democrats, that it is too early to declare an end to turmoil in the eurozone. She said:

I could take it easy and say the euro is saved. But I am very cautious about saying the worst of the crisis is over.

Ireland's Finance Minister Michael Noonan and Spain's Economy Minister Luis de Guindos (L) at EU finance ministers meeting in Brussels today, where they will discuss proposals for a single banking supervisory mechanism.

11.30 EU officials said finance ministers are unlikely to reach a deal on bank oversight today, and are set to meet on December 12 to continue thrashing out plans to put the ECB in charge of banking supervision, according to reports by Reuters.

11.19 The British Chamber of Commerceslashed its 2013 growth forecast to 1pc from 1.2pc and its 2014 projections to 1.8pc from 2.2pc, citing a weaker global economic backdrop and the likelihood of further fiscal tightening by the government.

11.01Boris Johnson attacked David Cameron and George Osborne as "morally wrong" for encouraging the 17 eurozone countries to move towards closer banking and fiscal union.

Speaking at a Reuters event, he said:

I don’t understand why we continually urge the eurozone countries to go forward with this fiscal and political union, when we know in our hearts that it is anti-democratic and therefore intellectually and morally wrong.

&lt;noframe&gt;Twitter: Bruno Waterfield - No austerity for military bureaucracy either, I see the new &amp;#8364;1bn Brussels HQ for &lt;a href="http://search.twitter.com/search?q=NATO" target="_blank"&gt;#NATO&lt;/a&gt; is underway &lt;a href="http://t.co/hojNEYC5" target="_blank"&gt;http://t.co/hojNEYC5&lt;/a&gt;&lt;/noframe&gt;

10.40 The euro hit a six-week high against the dollar yesterday as Greece offered to buy back 10 billion euros of bonds - a move thought to signal progress in its bid to tackle its debt pile. Traders were also investing in riskier currencies on the back of hopes the global economy is improving after China put out strong manufacturing data.

10.30 Latest figures on the UK construction industry show the weakest outlook since the depths of the recession in December 2008.

Activity shrank in November for the third time in four months, jobs were cut at the fastest pace in two years and new orders collapsed at their sharpest rate in three-and-a-half years.

10.21 London mayor Boris Johnson said he would campaign for Britain to stay in the EU if the relationship was renegotiated around the single market.

10.17 Boris Johnson on the euro:

It will limp on with sclerotic growth rates continuing to immiserate loads of uncompetitive parts of the eurozone and it will be a bad business.

We want free trade. We want the freedom to set our own monetary policy. We want an independent tax policy. We want less bureaucracy and less intrusion by Brussels into seemingly every aspect of our lives.

"We would like the EU to focus on completion of the Single Market. We want to be friends. We want a relationship in which we are not endlessly made to feel bad for not sharing every doctrine of the euro-religion.

09.27 Chancellor George Osborne has warned he will block a eurozone banking union if EU finance ministers heed calls of French central bank governorChristian Noyer to sideline the City of London as Europe's main financial hub.

His warning came as London Mayor Boris Johnson struck out at the euro, branding it a "calamitous project."

09.15 French finance minister Pierre Moscovici says all banks should fall under the European Central Bank's single supervisory mechanism "because the problems in Europe, contrary to what we think, didn't come solely or mainly from systemically important banks."

08.57Boris on Bank of France governor Christian Noyer's proposal for eurozone to seek "control" of euro-based financial transactions in London:

It’s nothing more than a naked attempt to steal London’s financial crown. It shows utter contempt for the principles of the single market and it will not succeed.

08.33 A subdued start from the European markets today amid uncertainty over US austerity measures, which hit a deadlock yesterday when the White House threw out Republican budget proposals.

The FTSE 100 is down 0.02pc, the CAC has risen by 0.3pc, the DAX is 0.01pc higher and the IBEX in Madrid climbed 0.26pc.

08.22 Spanish unemployment rose for the fourth month in November as struggling companies use new labour rules to fire workers.

Amid mounting evidence of recovery in the global economy, there is regrettably one region of the world which remains firmly engulfed in its own little cloud of misery – Europe.

Nowhere is the lack of progress more obvious than in attempts to forge a “banking union”, an absolute prerequisite of a properly functioning monetary union. Ministers meet this week in Brussels to try to thrash out a deal, with hopes apparently high of some kind of a breakthrough. The reality is a good deal less reassuring. Meaningful banking union in Europe any time soon? A snowball in Hades would stand a better chance.

I don’t want to exaggerate. It’s perfectly possible that outline proposals for the initial stages of a single supervisory mechanism might be agreed, and that would certainly be a start. But there is zero possibility of Europe moving any time soon to the sort of full-on banking union that might help to put the lid on the crisis.